benchmarking territorial competitiveness

8/8/2019 Benchmarking Territorial Competitiveness

http://slidepdf.com/reader/full/benchmarking-territorial-competitiveness 1/37

BenchmarkingTerritorial

Competitiveness

Ulrich Harmes-Liedtke

www.mesopartner.com

mesopartner working paper

09 / 2007



mesopartner

A preliminary version of this document was produced for the “Modernization andDecentralization Project” (PROMODE) run by the German Development Corporation (GTZ)

in Ecuador. I would like to express my thanks to colleagues for their support and for ourshared learning experience.

The sections on the Business Climate Survey in Central Java and the ProvincialCompetitiveness Index in Vietnam were contributed by Christian Schoen.

© of the authorUlrich Harmes-Liedtke, [email protected]

Buenos Aires 2007

mesopartner working papers are a product of mesopartner , aconsulting company specialising in local economic development. For

more information see www.mesopartner.com

ISSN 1613-298X



Contents

1 Introduction 1

2 What is Benchmarking? 2

2.1 Origins and definition 2

2.2 Forms of Benchmarking 4

2.3 The Benchmarking Process 6

2.4 Participatory Benchmarking 8

3 Benchmarking of Local or Regional Competitiveness 9

3.1 Territorial Competitiveness 9

3.2 Interested parties and practical experiences 11

3.2.1 Business Climate Survey in Central Java 12

3.2.2 Provincial Competitiveness Index in Vietnam 13

3.2.3 The Harvard Cluster Mapping Project 14

3.2.4 The Silicon Valley Index 15

3.2.5 Summary 16

3.3 Conceptual References 17

3.3.1 The Diamond of Competitiveness and Rankings 17

3.3.2 Systemic Competitiveness 19

3.4 The Compass of Territorial Competitiveness 21

4 Conclusions 22

Annex: Benchmarking table to assess Territorial Systemic Competitiveness 27



1 Introduction

Competitiveness is a concept and a reality that is rapidly spreading through-out the world. Market logic is an increasingly widespread principle that af-fects not only all kinds of companies but also territories, whether they arecities, regions or entire nations.

The increasing relevance of competitiveness leads to an increasing interestin finding out more about leading competitors, and learning from their suc-cess stories. How did the small and medium-sized businesses in the indus-

trial regions of Italy manage to remain highly competitive? What makesSilicon Valley and Bangalore leaders in information technology? Why didone region establish itself as a tourist destination while a neighbouring re-gion with similar resources failed to do so? Such questions foster morestructured and systematic comparisons, which in this paper I call Bench-marking Territorial Competitiveness (BTC).

In this working paper I am particularly interested in how economically dis-advantaged regions could benefit from Benchmarking. Stuart Rosenfeld, aresearcher studying the relation between competitiveness and regional eq-

uity, has this to say on the subject: “Poorer and peripheral regions have lim-ited access to .. benchmark practices, innovations, and markets. Withoutwider access, companies are limited to learning only within their regionalborders and have a difficult time achieving any sort of competitive position”(Rosenfeld 2002, 10). This statement refers to the less prosperous regions of Europe but is equally applicable to towns and regions in developing coun-tries.

In many developing countries the majority of craftsmen, producers or trad-ers lack knowledge about the innovations and new tendencies of the market

in which they operate. They often work in a manner that has been passeddown by previous generations, with little change. This way of doing busi-ness is increasingly being questioned in the light of globalisation, whichbrings the logic of competitiveness to the most remote regions. When nego-tiating free trade treaties, business people and producers are now under greatpressure to rethink their business model. Given the current situation, I wantto look at the way Benchmarking can help them to learn from internationaland local best practices.

This study was inspired by requests from various local development practi-

tioners for a more systematic investigation into best practices and an in-



2 Ulrich Harmes-Liedtke

mesopartner

creased level of exchange and learning on Local Economic Development. Inthis report I shall summarise some of my own experiences based on thosedebates and workshops, adding information taken from specialised literature

on Benchmarking and territorial competitiveness. The report is divided intothe following three parts:

1. In order to make the concept easier to understand, I define and synthe-sise some basic ideas on Benchmarking.

2. I then apply Benchmarking to the subject of the competitiveness of dif-ferent locations and territorial economies, with reference to practical ex-periences and with the inclusion of some conceptual ideas.

3. Finally I sum up a number of ideas on how Benchmarking could be usedto encourage local and regional competitiveness.

The objective of this report is to identify a form of territorial Benchmarkingthat might respond to the needs of local and regional development practitio-ners. It does not attempt to offer a definitive answer, merely a basis for de-bate between all those interested in the topic. The writer of the report will besatisfied if this study serves as a stimulus to local economic agents and oth-ers involved in Local Economic Development.

2 What is Benchmarking?

2.1 Origins and definition

The idea of Benchmarking is simple. It means admitting that someone elsecan do something better than oneself and that one can try to catch up withand overtake that person. Benchmarking is a process that stimulates changesand improvements in organisations on the basis of information collected forthe purpose of measuring the own performance as well as that of others. TheBenchmarking process must be systematic, formal and organised, in orderfor it to promote a series of actions in a specific order, which constitute acoherent and reliable sequence that any member of the organisation can re-peat. This process is continuous, since it takes place over a more or less ex-tended time period, in order for it to demonstrate the dynamism of thestrategies or their results. Benchmarking thus makes it possible to diagnose,measure, compare and evaluate, amongst other things, services, work proc-esses, functions, etc., with the focus on the way they are offered and carried

out rather than on what the particular service is.



Benchmarking Territorial Competitiveness

mesopartner

The expression “Benchmark” originally comes from topography. It is amark topographers make on a rock or a concrete post in order to comparelevels. The expression Benchmarking entered the business vocabulary in the

early 1980s, when the Rank Xerox corporation used it to refer to the com-parison between one company and its direct competitors, or those compa-nies recognised as industry leaders. Its meaning was then broadened: thecomparisons were to go beyond local and industry competition, in pursuit of best practices wherever they might be found.

Rank Xerox studied the practices of a company from another sector, namelyL.L.Bean, a leader in outdoor clothing, in order to improve its distributionsystem and re-establish its market leadership. This is an important example,since it demonstrates the usefulness of comparisons with companies from

other areas of activity.

It is worth taking a closer look at the Rank Xerox case. What practices did itadopt and from what companies? There is no standard design for theBenchmarking process that can be adapted to all organisations. The mostimportant thing is for the adopted design to function within the present cul-ture of the organisation and help it produce a culture of continuous im-provement.

Today Benchmarking is a practice that has spread beyond its business ori-gins and is now applied to any organisation, institution or establishment,whether it produces similar results or not; it seeks to identify the best com-mercial practices that can be implemented in those areas that need im-provement. 1

The different definitions of Benchmarking have the following elements incommon:

• Developing competitive advantages.

• Studying best practices in organisations from any industry or country.

• Comparing the performance of an organisationorganisation with that of others, in order to obtain information that, when creatively adapted,might lead to an improvement in its performance.

1 One institution that has pioneered the application of Benchmarking to public ad-

ministration and institutions promoting local employment is the Bertelsmann Foun-

dation in Germany (see Bertelsmann 2001, 2003 and 2004).




mesopartner

In summary, Benchmarking is a tool for developing competitive advantagesin an organisation, based on the creative or innovative adaptation of existingbest practices.

2.2 Forms of Benchmarking

A simple typology can be used to explain the different types of Bench-marking:

Internal Benchmarking is based on the analysis of processes and outputswithin a particular company, organisation or territory. In many companiesand organisations, similar operations are carried out in numerous installa-tions, departments or divisions. This is especially true of multinational cor-porations, which function at the international level. For this reason, manylarge companies begin their Benchmarking activities by comparing their in-ternal practices. Although it is unlikely that they might discover best prac-tices internally, identifying the best internal operational practices is, none-theless, an excellent starting point.

The strongest argument in favour of implementing internal Benchmarking isthat, even though the various divisions form part of the same organisation,geographical differences, and differences in culture and organisational ap-

proach almost always result in differences in work processes. As a conse-quence of the discovery of “local innovations”, many companies have beenable to obtain rapid benefits by transferring this information to other opera-tions within the same company or organisation. In the same way, a RegionalGovernment could compare different processes and results at the municipallevel, or carry out Benchmarking between the different departments of theregional administration itself.

Internal Benchmarking might be a good starting point from which to initiateBenchmarking for a large company or organisation, since it enables it to do




mesopartner

a trial run before embarking an external study of greater scope, and to es-tablish Benchmarking objectives in realistic, although simple and concen-trated, terms. If this is not done before visiting another company or organi-

sation, all one will come back with is a mass of information that will diffi-cult to adapt to internal practices.

External Benchmarking is divided in turn into two kinds:

• Competitive Benchmarking

• Functional or Generic Benchmarking

Competitive Benchmarking is based on the analysis of and comparison withthe competition. It is the easiest type to understand due to the fact that it isoriented towards the products, services and work processes of direct com-petitors. Employees know that this kind of information is valuable sincethey are aware that a competitor’s practices affect potential or existing cli-ents, suppliers and industry observers. The key advantage to be gained fromcarrying out a Benchmarking process with your competitors is that sincethey employ the same, or very similar, technologies and processes as yourown, the lessons that you and a competitor learn from each other are in gen-eral very easily transferred.

Competitive Benchmarking faces the problem of sharing data with com-

petitors, which makes it somewhat difficult for comparisons between com-panies. Things are somewhat different when it comes to comparing loca-tions. For instance, this methodology could be of relevance when comparingthe practices of different fishing ports in a country, or different locationswith a similar economic profile. On the other hand, it must be recognisedthat the competitive relationship between regional and local territories ismuch less accentuated than the one that is established between direct com-petitor companies.

In functional Benchmarking the organisationorganisations being compared

may or may not be direct competitors. The object of functional Bench-marking is to highlight the best practice of a company recognised as being aleader in a specific area. It is often referred to as ‘generic’ because it is di-rected at functions and processes that are common to many companies,whatever sector they belong to, including manufacturing, engineering, hu-man resources, marketing, distribution and invoicing, to name but a few. Onaccount of the lack of direct competition it is easier to share data in genericBenchmarking.

Another important distinction is made between Benchmarking of processes

and that of output or performance . According to the original concept,




mesopartner

Benchmarking is all about comparing critical business processes, naturallywith the intention of improving results. But Benchmarking in the publicsector is oriented above all towards results or indicators related to perform-

ance, and thus serves first and foremost as a comparison of outputs. Thereare hardly any systematic comparisons of processes, and no Benchmarkingwith sectors from other areas of activity, as is common in the business sec-tor. That is a shortcoming that should be rectified with an eye to the future.(Bertelsmann 2001, 11.)

2.3 The Benchmarking Process

Benchmarking can be divided into five principal phases:

1. Definition of objectives

The definition of objectives serves to clarify the results that are hoped to beobtained from Benchmarking, and comparing them with the resources avail-able for implementing such activities. Any Benchmarking process may havemultiple objectives, but these must always be oriented towards improvingthe competitive position of the entity being studied. It is important to definethe objectives on the basis of the client’s needs and those of otherstakeholders. If the aim is to organize Benchmarking in a participative man-

ner, the various important groups, including those at the executive level,




mesopartner

should be integrated from the outset. In addition, it is advisable to set up aBenchmarking project team, which can depend on the advice of an experi-enced external Facilitator.

2. Internal Diagnostic

Internal diagnostic consists in identifying the key processes of a company ororganisation. This entails identifying those areas or processes that need to beimproved: core competencies of the organisation, central processes or criti-cal areas, on which the satisfaction of clients or users depends. In order tokeep the project manageable, it is advisable to be specific when definingobjectives, and to focus on a few key processes rather than embracing the

entire reality of the company or organisation.

3. Comparison

Benchmarking begins with a study to identify those companies or organisa-tions that are well known within the area being investigated, and thus estab-lish which are the best of their kind or are representative of the best prac-tices. When seeking appropriate benchmarks, it is also important to take intoaccount the cost and the ease of access to the available information. If the

aim is to visit excellent companies or organisations, it may be more feasibleto select those in the neighbouring area rather than in distant countries. It isequally important to look beyond one’s own industry, and also seek bestpractices in other sectors.

The heart of Benchmarking is the collection and analysis of information re-lating to practices that can be adopted to improve the performance of the or-ganisation in the selected areas. A project team will be responsible for plan-ning and carrying out the comparative evaluation of the organisation’s per-formance. Information gathering is not restricted to visiting other organisa-tions. An important part of the research work consists in reviewing docu-ments, files and publications, in addition to visits, surveys, interviews andmeetings. The data analysis will depend in each case on the kind of data andon the needs of the organisation.

4. Defining activities

Once best practice methods have been identified it is a case of analysingwhy others get better results. It is sometimes thought that Benchmarking in-volves taking or stealing information in an ill-judged fashion. This is why it




mesopartner

is essential to bear in mind that the practices usually need to be creativelyadapted to the new context. Moreover, one must take into account the re-sources available for implementing the necessary changes.

5. Implementation

The project team designs an implementation plan for applying the bestpractices that have been identified. In order to get the support of otherstakeholders it is important to communicate to them what actions have beendetermined and what the expected results are. The whole implementationprocess must be monitored to assess its effects and readjust the measuresshould this be necessary.

Benchmarking should not be seen as an isolated exercise. In order for it tobe effective, it must be an integral part of a process of continuous improve-ment for keeping up-to-date with current best practices. Consequently,Benchmarking is not a closed sequence, but rather an ongoing process of communication and learning.

2.4 Participatory Benchmarking

Benchmarking is a technique that can also be applied to processes of par-ticipatory development planning. In recent decades there has been a sharpincrease in the number of community-based planning projects that usebenchmarks and indicators for measuring progress in a participatory man-ner. Such projects are to be found in many countries of the world, at the na-tional, regional or local level.

In general terms, these projects have five features in common:

1. They attempt to integrate economic, social and environmental objectivesinto the framework of an integral vision of development.

2. They set benchmarks and develop suitable indicators for monitoring theprocess designed to achieve their objectives.

3. The indicators and benchmarks are initiated, developed and monitored indifferent forms of a participatory community process, which sometimesincludes the entire community, and at other times focuses on a specificgroup within the population.

4. They tend to be processes that are both long-term (which is to say, over

5 years in duration) and interactive.




mesopartner

5. They have established, or will establish over time, a relation with theformal processes of governance in their community.

In order to implement participatoryive Benchmarking successfully, particu-lar care must be taken to relate the benchmarks and indicators in the appro-priate manner. Various groups with different interests and functions mayparticipate in the process of developing benchmarks and related indicators;ranging from representatives of business associations, unions and produc-tion chambers, social consumer associations and environmental groups, tolocal government representatives, experts or representatives from thebroader community. They will all have their own benchmarks and indicatorsthat respond most adequately to the aspirations of each particular group. Thekey to the participative process of creating community benchmarks is for

citizens to collaborate in determining and monitoring the objectives, in orderfor them to better understand and learn about necessary resources and anyrestrictions that must be faced.

The result of this process should not be simply benchmarks and indicatorsas such, but rather a growing level of community activity (local projects andstrategies, committees and meetings between those interested in sustainabledevelopment; better standards of governance; increasing attention to andunderstanding of the priorities of government and the community) and, intime, stronger communities.

3 Benchmarking of Local or Regional Competitiveness

3.1 Territorial Competitiveness

Benchmarking was created as a methodology for enabling companies to im-prove their position in their competitive environment. Before applying

Benchmarking to territorial entities, we might ask ourselves whether theconcept of competitiveness is equally valid for such entities, that is to say,for countries, regions or cities.

In the case of countries, Krugman (1994, 34) questions this analogy, sincehe argues that countries do not compete with each other in the same waycompanies do; unlike a company, a non competitive country never stopsdoing business. For Krugman, international commerce is merely a strategic(or non-cooperative) game. Porter (1990), on the other hand, who sparkedoff a debate on territorial competitiveness, insists that countries – he talks of

“nations”- can develop and improve their competitive position in relation to




mesopartner

others. He emphasises the capacity of countries to create and maintain theright conditions for companies to develop specific competitive advantages.At the same time this view can be distinguished from the static vision of

competition based on capital and low-cost labour, since instead it stressesdynamic aspects, i.e. the capacity for continuous innovation, change andimprovement. In the final analysis, the competitiveness of a nation dependson the levels of productivity its companies achieve and their ability tomaintain them over time. If productivity and competitiveness are taken to besynonymous, then this view is compatible even with the ideas of Krugman,who says that a country’s ability to improve its standard of living over timeis almost entirely dependent on its capacity to increase output per worker(Porter 1990, 9).

In recent years the debate on competitiveness has shifted its focus from na-tional competitive advantages to regional ones. Camagni (2002) – dis-agreeing with Krugman’s thinking – states that economic globalisation af-fects not only companies, but also territories, which increasingly find them-selves competing with each other. In fact, unlike countries, cities and re-gions compete in an international market for products and production fac-tors , based on a principle of absolute rather than comparative advantagesince exchange rates are not set on a location-by-location basis. There is noefficient and automatic market mechanism that gives each territory a role inthe international division of labour according to its relative characteristics.

Consequently, territories that are less competitive in terms of internal orexternal accessibility, the quality of its human or environmental factors, orits capacity to learn, risk being excluded or remaining in a slump. The com-petitiveness of a location depends less and less on its natural resources, andincreasingly on the creative and innovative ability of local economic actorsto make the most of its existing potential.

Competition between territories does not always produce positive results.We can identify two types of competition between locations:

1. One well-known type is that of static price competition, in which thegovernments of different territories attempt to attract investors throughlower taxes and salaries, or with higher subsidies. This form of competi-tion is characterised by winners and losers and often leads to a race tothe bottom that results in labour and environmental standards beingeroded. In the worst case scenario it does not even result in a strategicgame.

2. The alternative is a dynamic vision of competition, based on the win-win concept. On the basis of a specific endowment of factors and capa-bilities, each territory seeks to develop its unique competitive advantage.




mesopartner

This concept of competitiveness aims to achieve a local specializationthat enables different territories to cooperate in a context of general de-velopment.

In a situation in which different territories compete to persuade a companyto set up there, or aspire to host an important event, we are not going to findthe right conditions for cooperation on Benchmarking. Each candidate isgoing to try and spy on the conditions of its competitors, without giving anyinformation about its own approaches. The same thing is likely to happenwhen two fishing vessels operate in the same coastal waters and have thesame intermediaries. In such cases, comparison with competitors may leadto imitation, but it will not be enough to achieve a real competitive advan-tage.

Benchmarking is more productive when it is carried out between territoriesthat are not in a situation in which there is such direct competition. As Ihave already explained, it can be useful to study best practices even in un-related institutions. The idea here is exchange and learning in the commu-nity, which is an tool for fomenting the competitiveness of regions in a co-operative manner.

3.2 Interested parties and practical experiences

In an “era of indicators of performance and rankings” (Kitson 2004, 997)regional Benchmarking is fashionable, and comparisons between the eco-nomic development of different regions and cities are increasingly common.There are various groups of actors who are interested in the economic-territorial comparison:

• Companies seeking production, research and sales locations. It is ex-tremely important for them to have detailed, precise information on newsites.

• Mobile people seeking new places to work, study or set up a new busi-ness.

• Marketing directors of cities and regions who wish to make their localityattractive to investors, qualified professionals and tourists.

• National and supranational institutions and international cooperationagencies that are particularly interested in development in less prosper-ous regions.




mesopartner

• Researchers interested in empirical data for studying the mechanisms of local competitiveness.

•

The media, who see the rankings of places as an attractive product.There are different methodologies for comparing localities, which corre-spond to the specific needs of each group. I have selected a few examplesfrom among the wide range of Benchmarking and ranking methods, in orderto demonstrate the diversity of this field.

3.2.1 Business Climate Survey in Central Java

Under contract by GTZ-red (Regional Economic Development) in Indone-sia, Swisscontact and mesopartner conducted a Business Climate Survey(BCS) in 2005. The BCS comprised the seven districts in the Solo Raya re-gion (formerly SUBOSUKAWONOSRATEN region) that is located in theSouth of Central Java province. The BCS addressed the whole range of gov-ernment-created factors that shape the enabling environment for business,from generic and sector-specific laws and regulations to service delivery in-cluding development activities, as well as companies’ internal efforts to in-novate and strengthen their competitiveness. The BCS does not only includeinformation gained from the survey, which builds on the perception of en-terprises, but also on information gained from hard statistical data. These

aggregated figures are the basis for calculating indices to assess and rank theSolo Raya region as whole, each of its districts, and each sector. This meth-odology allows to provide a solid picture on local/regional as well as sector-specific competitiveness and facilitates benchmarking efforts. The BCSidentified a number of shortcomings regarding the business environmentand economic dynamics of the region, which need to be addressed jointly byall stakeholders, i.e. the businesses themselves, the government and the sup-porting environment.

The BCS 2005 and its results, particularly the sector benchmarking and thedistrict benchmarking, were highly acknowledged by the district govern-ments of the region and the provincial government of Central Java andstimulated reform efforts at the district level. In 2007, the BCS will be re-peated on a larger scale and deploying a more focused survey questionnaire.Due to the request of the provincial government, the BCS 2007 will coverall 35 districts in Central Java and will be jointly organised and financed bythe provincial government, GTZ-red and a leading media company in Cen-tral Java.




mesopartner

3.2.2 Provincial Competitiveness Index in Vietnam

The Provincial Competitiveness Index (PCI) was developed by the Vietnam

Competitiveness Initiative (VNCI) and the Vietnam Chamber of Commerceand Industry (VCCI) 2. VNCI is an economic development project funded byUSAID. VNCI is managed by Development Alternatives Inc. (DAI) and theAsia Foundation as the main subcontractor to DAI. The Asia Foundation isin charge of the research and policy component of VNCI that also includesthe design and elaboration of the PCI.

The PCI assesses and ranks provinces by their regulatory environments forprivate sector development, i.e. the provincial governments’ treatment of and attitude towards private enterprises. In 2005 the PCI covered 42 prov-inces, accounting in total for 89% of the national GDP. In 2006, the secondPCI included all 64 provinces and major cities in Vietnam. In general, the2006 PCI has seen a different and larger sample set, a modified methodol-ogy and new sub-indices and indicators.

Following the implementation of the Enterprise Law in 2000, Vietnam hasseen considerable private sector growth. Since 2000, more than 120,000formal private companies have been registered, six times the number of formal private registrations in the nine years prior to the law.

However, the critical issue in Vietnam is that this success is limited to asmall number of provinces. In 2005, only 11 of Vietnam’s 64 provinces ac-counted for more than 60% of private sector growth along with 70% of pri-vate sector investment and revenues.

The PCI has been designed to measure the variance in provincial regulatoryframeworks, excluding structural endowments such as infrastructure, geo-graphical location, proximity to markets and human resources that give par-ticular advantages to some provinces, but can hardly be improved in theshort term. PCI makes the attempt to prove that good economic governanceis able to improve private sector performance in provinces regardless of

natural endowments and other comparative advantages.

Provincial leaders are expected to use the PCI as a guide to identify theirstrengths and weakness more accurately. VNCI is encouraging the provincesto identify low scores by first looking at the sub-indices and after that atspecific indicators within sub-indices. Development activities should di-rectly address the weaknesses identified. Province are furthermore encour-

2

Source : http://www.vnci.org




mesopartner

aged to look at better performing neighbours, who are supposed to deal withsimilar economic issues, and to try learning from them.

After controversial discussions in 2005, the PCI is now an established pol-icy tool in Vietnam to conduct a diagnosis that concentrates on the eco-nomic governance of provinces. The PCI attracted attention from a varietyof stakeholders, such as the business community, the media, the donorcommunity and the provinces themselves. Most remarkable is the immedi-ate positive impact of the PCI. Several provinces directly embarked on ac-tivities to improve their regulatory environment and their behaviour vis-à-vis enterprises. The PCI started to trigger competition among provinces toupgrade their regulatory performance. For instance, the authorities in HaTay province that ranked at the very bottom of the table in 2005 entered into

a number of commitments to improve their regulatory environment and or-ganized a major investment promotion conference in early 2006. Donor or-ganisations such as GTZ or DANIDA have integrated the PCI into theirprogramme activities, e.g. for monitoring purposes. The PCI is frequentlyquoted by the prime minister’s office as well as by media and was declaredone of the top 10 economic events in Vietnam in 2005.

3.2.3 The Harvard Cluster Mapping Project

The cluster mapping project 3 was inspired by the research done by Michael

Porter (1990) on “The Competitive Advantage of Nations”. Porter situatesthe most influential factors of competitiveness at the regional level. Re-gional economies are specialised, since each region represents a differentmix of industrial clusters. A cluster is a geographically concentrated groupof interconnected companies and associated institutions within a specificfield, including product manufacturers, service providers, universities andbusiness associations.

In order to measure the development and competitive strength of various re-gions, Porter’s team systemised all the regions of the United States. They

analysed regional economies on different geographical levels, includingfederal states and metropolitan areas. The data were divided into three broadcategories: general economic development, composition of the regionaleconomy, and the competitiveness of clusters. Such data can be used toidentify the most important clusters in a region’s economy, to compare theposition of a cluster from one region with those of others, to understand thedrivers of relative income, growth in employment and in the establishment

3

Source: http://data.isc.hbs.edu/isc/cmp_results.jsp?type=benchmark.




mesopartner

of new companies in a region, and the development of the a region’s registerof patents.

For Porter, regional competitiveness is closely related to the existence of clusters. He criticises what he regards as the short-sighted attitude of manylarge companies, which decide to locate there installations wherever theycan save most on costs. Instead, business leaders should seek out localitiesthat unite specific industrial resources in a cluster (see Silicon Valley or theNapa Wine Valley), which can result in a competitive advantage. The Har-vard Cluster Mapping Project fulfils the function of producing empiricaldata for supporting this message.

3.2.4 The Silicon Valley Index

Since 1996, an annual index has been published to provide information oneconomic development in Silicon Valley. 4 The index serves to strengthenregional identity, and provides a solid basis for organising coordinated, pro-active efforts to make Silicon Valley a better place to live, work and dobusiness.

The index is produced by Joint Venture, a non profit organisation, whichprovides information on the region’s economy and quality of life. JointVenture brings together established and emerging leaders from business, la-

bour, local government, education and NGOs in order to create a regionwith sustainable development and one that is oriented towards competitive-ness in the global economy.

The focus of the index is clearly the internal analysis of Silicon Valley. Us-ing a set of 37 regional indicators, the index measures progress towardsachieving the goals established in the Strategic Plan for 2010: “A RegionalFramework for Growing Together”. The objectives of Silicon Valley 2010were developed by taking into account the contributions of 2,000 residentsof Silicon Valley. Four main areas were identified:

(1) Our innovative economy makes productivity grow and increases pros-perity.

(2) Our community protects the natural environment and promotes healthyliving conditions.

(3) Our society connects people and opportunities.

4

Source: http://www.jointventure.org.




mesopartner

(4) Our public and private institutions develop shared solutions.

Every year the index is presented at an event organised for the broader

community of the region. In addition, the results of the index are dissemi-nated throughout the world. Thus, the Silicon Valley Index is an importantregional marketing tool.

3.2.5 Summary

The promoters of the various examples of the comparison and analysis of regional economies differ greatly from each other: a popular economic jour-nal, an agency for promoting regional employment, an internationally re-nowned university, and a non profit organisation.

In the cases of Central Java and Silicon Valley the initiative arise in the re-gion itself. In Silicon Valley, the index is even produced with private re-sources. Here, internal indicators are analysed above all else, with only oc-casional comparisons being made with other regions or with the nationallevel. Similarly, in Central Java the focus is at comparing different locationswithin one major region

In the case of the Harvard Cluster Mapping Project and the Vietnam experi-ence we are dealing with external institutions that are comparing local eco-nomic realities. In the Vietnam case, provinces within one country are com-pared, and the initiative is introduced in a top-down way, without consultingprovincial decision makers first. The focus is at stimulating provincial ef-forts to create a more business-friendly environment. The Cluster MappingProject includes very detailed information that enables us to identify thecompetitive profile of the US regions. Detailed information on relative in-come, employment and business ventures could be of some value to inves-tors, but the main beneficiaries of the project will be researchers studyingcompetitiveness.

Classification of different types of Competitive Territorial Benchmarking

The initiative comes from a par-ticular region

The initiative comes from an ex-ternal institution

Benchmarking functions throughan agreement between partici-pating regions

(1) (Example: Central Java): em-phasis on learning from eachother

(3) (Example Harvard ClusterMapping Project): stimulates aca-demic debate

The participation of Benchmarkregions is not required

(2) (Example: Silicon Valley):oriented towards internal strat-egy and useful for regional mar-keting

(4) (Example: Vietnam ProvincialCompetitiveness Index): there arewinners and losers




mesopartner

3.3 Conceptual References

If we wish to design a system for Benchmarking competing regions, we are

faced with the problem of there being no scientific consensus on those fac-tors that guarantee successful regional development, and less still regardingthe indicators for measuring the competitiveness of regions and localities. 5

On the other hand, we do have a number of conceptual models for analysingterritorial competitiveness, and I shall limit myself here to mentioning theinstruments we apply at mesopartner in our Local Economic Developmentconsultancy.

3.3.1 The Diamond of Competitiveness and Rankings

One of the most widely used tools for the diagnosis of territorial competi-tiveness is Michael Porter’s Diamond (Porter 1990). Porter developed thisschema in the framework of a study on the Competitive Advantage of Na-tions, and later applied it to other territorial aggregates such as regionaleconomies or local clusters. This tool is used to identify four key elementsthat explain the competitiveness of a territory:

1. Company strategy, structure and rivalry.

2. Factor conditions.

3. Related industries and support institutions.

4. Demand conditions.

In later publications, he also mentions “government” and “chance” as addi-tional factors that influence competitiveness (e.g. Porter 1998).

In order to facilitate understanding amongst a non economist target group,in our PACA work we employ a simplified version of the Diamond of Competitiveness:

5 See for example the debate Regional Studies, Volume 38, Núm 9, December 2004,

Special Issue: Regional Competitiveness.




mesopartner

Source: Meyer-Stamer 2003

Here (local) government activities are integrated into the angle of supportinstitutions.

Porter’s diamond also served as an inspiration to the designers of the Com-petitiveness of Countries Rankings. One such “league table” has been pub-lished in the World Economic Forum (WEF) since 1979. 6 In a recent edi-tion, this Global Competitiveness Report (GCR) compared the competitive-ness of 80 countries throughout the world. The report is praised by its ownauthors for being “the most authorised and comprehensive approach tocomparing the strengths and weaknesses of national economies around theworld” (Cornelius and Schwab 2003). They identify two dimensions of competitiveness: expectations for growth over the next 5 to 8 years, and thecompetitiveness of businesses, which relates to the effective use of a coun-try’s available resources, based on the four elements of Porter’s diamondstructure. (Malecki 2004, 1102)

Since 1989, the International Institute for Management Development hasbeen producing another report, the World Competitiveness Yearbook (WCY), which compares the competitiveness of various countries in theworld. Both reports include hard data and data from opinion surveys carriedout among executives. The WCY analyses the huge total of 314 (!) indica-tors grouped into four categories of competitiveness factors: economic per-formance, governmental efficiency, business efficiency and infrastructure.Since the 2003 edition it also includes some regional economies, such as

6

http://www.weforum.org/pdf/Gcr/GCR_2003_2004/GCI_Chapter.pdf.




mesopartner

Bavaria (Germany), California (USA), Catalonia (Spain), Ile-de-France(France), Lombardy (Italy), Maharashtra (India), separately from their na-tional economies.

The authors state the following arguments for including regions in theirrankings:

• Regions present profiles that are different from their respective nations.

• Regions seek greater independence for managing their competitiveness.

• Regions represent “pockets of competitiveness”.

In summary, it would appear that the Diamond of Competitiveness offers a

certain structure for the comparison between competing territories. The twoexamples given above also demonstrate that the four angles of the diamondwere not sufficient in themselves for Benchmarking, but that they inspiredthe creation of more sophisticated sets of indicators.

Although the rankings of nations and regions is based on the combination of a large number of factors and variables, one can still have certain doubtsabout the significance of the ranking results. “Even though a ranking of allcountries reflects a combination of factors and variables put together in acertain way, the combination is not the same as systemic competitiveness”

(Malecki 2004, 1103 f).

3.3.2 Systemic Competitiveness

The concept of Systemic Competitiveness addresses the factors that shapethe growth and prosperity of a given country or territory. It goes beyond thetraditional approach of focusing at the macro-level, i.e. the generic frame-work conditions that are shaped by macroeconomic policy and institutions,and the micro-level, i.e. the workings of markets. It emphasises the need toalso consider the meso-level, i.e. targeted interventions to shape a competi-

tive advantage, and the meta-level, i.e. the slow variables that shape a soci-ety’s capability to respond to the challenges of a globalised world.

A practical way to apply the concept of Systemic Competitiveness isthrough qualitative benchmarking. Qualitative benchmarking is a methodwhich has successfully been applied for company benchmarking. It is fun-damentally different from quantitative benchmarking. Quantitative bench-marking approaches, which are being applied both for companies and forregions, are often difficult to apply since many data are not available or notconsistent. More importantly, at a territorial level they often do little more

than indicate problems which are obvious anyway. Qualitative benchmark-




mesopartner

ing looks at key factors which determine successful development – be it of acompany or a region – and then applies a scoring model which is based ongroup discussions with key stakeholders. The company-related approach has

been described by Collins, Cordón and Julien (1996); its applicability in adeveloping country setting has been demonstrated in Brazil through practi-cal work of the Instituto Euvaldo Lodi.

In the Annex, you find an attempt to apply this type of approach for territo-rial benchmarking. It is based on a questionnaire that is supposed to helppractitioners in getting a better understanding of the systemic competitive-ness of the location they are investigating. More specifically, it providesthem with a list of features which define the difference between poor andhigh-performance localities. A high-performance locality would score high

on most, if not all features.

This questionnaire is for application with a group of local stakeholders. Op-tionally, you may consider to introduce a dynamic perspective, i.e. to look atthe current situation and the situation five or ten years ago.

There are still a few questions regarding the use of this kind of questionnaireas a tool in Regional Benchmarking:

1. Although this questionnaire is based on the concept of systemic com-petitiveness, it does not help us to understand the systemic interactionsbetween the various factors. It tells us nothing about the cause and effectrelation or about possible “feedbacks”. Therefore it makes it difficult forus to identify the systemic implication of a good evaluation of a par-ticular characteristic.

2. For an “objective” comparison of different territories we need uniformcriteria. Evaluations that employ qualitative criteria differ greatly ac-cording to who is doing the evaluation. It is also essential to take intoaccount the timeframe, since the competitiveness of a region is continu-ously evolving.

3. The selection of criteria for the questionnaire unites the experience gath-ered from academic debate and the subjective experience of the author.Consequently, we should not take these factors as a given, but rather un-derstand them more as an incentive. We shall see in the following chap-ter that the critical factors for success are different in each particularcase.

Despite such doubts, the questionnaire seems to be particularly useful forcomparing different competitive territories. The challenge will be to create a

data base that might permit real inter-territorial Benchmarking; in fact, it is




mesopartner

questionable whether a questionnaire-based, participatory approach can leadto an outcome that complies with scientific criteria. Nevertheless, the ques-tionnaire is a useful tool in stimulating local stakeholders to critically reflect

the strengths and weaknesses of their local economy. Using the question-naire with local stakeholders in a given region can be the entry point to a

joint process of developing a genuine systemic analysis, i.e. identifying thefeedback mechanisms that promote or retard economic development in therespective territory.

3.4 The Compass of Territorial Competitiveness

The Compass of Local Competitiveness is a tool to monitor and assess the

strategic approach to and the progress of territorial development / LocalEconomic Development (LED) initiatives. It is based on the BalancedScorecard (BSC) method. Whereas BSC has been designed for the use incompanies and other organisations, the Compass is specifically designed tocater for the needs of territorial development initiatives. The preparation of aCompass is the result of a facilitated workshop that takes up to one day.

There are a few references in the literature regarding the relations betweenBalanced Scorecards (BSC) and Benchmarking. 7 In the publications by thecreators of BSC there is a certain scepticism regarding Benchmarking:

Robert S. Kaplan asked Larry D. Brady, executive vice president of FMCCorporation, one of the most diversified companies in the United Stateswith worldwide revenues in excess of $ 4 billion: “Benchmarking has be-come popular with a lot of companies. Does it tie in to the balanced score-card measurements?” Brady answered: “Unfortunately, benchmarking isone of those initially good ideas than has turned into fad. About 95% of those companies that have tried benchmarking have spent a lot of moneyand have gotten very little in return. And the difference between bench-marking and the score card helps reinforce the difference between processmeasures and output measures. It’s a lot easier to benchmark a process thanto benchmark an output. With the scorecard, we ask each division managerto go outside their organisation and determine the approaches that will al-low achievement of their long-term output targets. Each of our outputmeasures has an associated long-term target. We have been deliberatelyvague on specifying when a target is to be accomplished. We want tostimulate a thought process about how to do things differently to achievetargets rather than how to do existing things better. The activity of search-ing externally for how others have accomplished these breakthrough

7 The studies identified refer exclusively to companies (see Below 2003 and Bandow

2004).




mesopartner

achievements is called target verification and not benchmarking.” (Kaplan1993, 15).

At the same time, Kaplan himself recognises the usefulness of Benchmark-ing the indicators of one company with those of others. 8 The advantage of BSC lies in the fact that it starts from a strategic vision and translates it intocritical factors, key indicators, targets and actions. Benchmarking, on theother hand, does not have this link with strategic objectives and thus runsthe risk of comparing factors that are not really vital to success.

Once a BSC has been elaborated, Benchmarking can be very useful. In orderto be able to compare indicators with competitors, in our case other similarregions and leading localities, there must be a certain uniformity in the defi-nition of indicators of outcomes (and not of processes). When the regionwith which we are comparing ourselves produces better results than ourown, it is useful to identify the causes of this difference. In all likelihood theregion being used as a comparison (the benchmark) has more efficient proc-esses than our own. Once the best practice has been identified, it is a ques-tion of analysing if and how this practice can be made use of in our own or-ganisation. Therefore Benchmarking of results/outputs leads us to theBenchmarking of processes. It should be remembered that it is not alwayspossible to transfer a good practice from one organisation to another.

Thus the Compass of Local Competitiveness can be of use for identifyingkey factors and indicators for the competitiveness of a region, which arecomparable within the framework of a system of interregional Benchmark-ing. In order to arrive at a greater number of comparable indicators, it is ad-visable to elaborate some type of generic BSC, which the different regionscan adapt to fit their own reality.

4 Conclusions

When it comes to designing a plan for Benchmarking Territorial Competi-tiveness it is necessary to seek a balance between two arguments:

1. One view is that the actors in a region (of a developing country) couldlearn from economically successful regions, which are located, on thewhole, in developed or emerging countries (e.g. the industrial districts of

8 “The five results indicators of Apple were “benchmarked” with the “best-in-class

organisations” (Kaplan 1993, 11).




mesopartner

Italy, or Silicon Valley, or Bangalore). The Benchmarking of LocalitiesQuestionnaire is based on this idea, although the systemic competitive-ness approach is broader and also includes a reflection on the overall

conditions in developing countries.

2. The other line of argument focuses on the uniqueness of each local eco-nomic development process. Each system has its own logic, so what isuseful for one is not suitable for another. “There are certain doubts aboutthe usefulness of Benchmarking processes with the objective of im-proving regional competitiveness: because there is no ‘optimum’ devel-opment model, it is difficult to copy or imitate a successful model fromanother place, and often new trajectories arise in space” (Boschman,2004, 1001). 9 In this regards, the Compass of Local Competitiveness is

an instrumental response that can be strategically implemented withoutthe need for comparisons with other regions.

In addition to the two extreme positions, I see a good opportunity for com-bining the different instruments in an intelligent way in order to make themost of internal and external approaches. The usefulness of the Compasslies in its ability to identify the key factors for competitiveness in each par-ticular case. This does not rule out the possibility of elaborating a genericBalanced Scorecard that captures a set of typical factors and indicators,which may contribute to the creation of a concrete Compass of Local Com-

petitiveness. The elaboration of a generic framework should even make useof the scientific wisdom of concepts like the diamond of competitiveness orthat of systemic competitiveness.

The overall objective of a Benchmarking of Territorial Competitivenesscould be to stimulate inter-territorial learning in order to increase the com-petitiveness of the provinces and municipalities and their companies, andthereby make good use of free trade treaties for integral and sustainable de-velopment.

Specific objectives include the following:

• The internal analysis of the competitive situation of each participatingprovince or municipality serves to clarify and improve the economic de-velopment strategy for the territory.

9

Author’s translation.




mesopartner

• The comparison with other territories facilitates an understanding of thecurrent development situation of each participating territory and pro-vides orientation for possible improvements.

• Benchmarking facilitates the identification of good practices already de-veloped elsewhere and their dissemination throughout the region orcountry in question.

• Benchmarking increases transparency regarding results and the man-agement of economic development in the territories, and thus serves asan encouragement to those in charge to achieve good results.

• A Benchmarking system is of use to national organisations and for in-ternational cooperation, since it gives clear indicators on where thegreatest impact of policies for encouraging territorial competitiveness isfound.

When it comes to launching a Benchmarking initiative the actors can choosebetween several methodological options:

• Identifying good practices . Here it is important to distinguish betweenindicators of results and indicators of processes. Comparing the formerhelps us to identify good practices in processes. Transferring knowledgeabout best practices leads to genuine innovations and real progress.

• A very simple way of learning from the experience of others is throughwork placement programmes. This is often a means of finding aboutsuccess stories from neighbouring regions or countries. When the com-panies concerned are not direct competitors, and obviously also in thecase of development agencies, the exchange of experiences is very oftenof interest to both parties. At the same time it might be interesting tovisit the world leaders and learn directly from their experience.

• For institutions at the national or international level it might be interest-

ing to organise contests between competing cities or regions. Such aframework could combine the notions of competition and co-opetition,in order to encourage territories to make more of an effort in the field of economic development. There is also the possibility of combining suchcontests with the distribution of public funds.

• Similarly, rankings could encourage competition between territories andfacilitate the disclosure of good practices. A good position in the rank-ings could help a city or region become attractive to investors, entrepre-neurs or qualified personnel. When dealing with specific rankings, for




mesopartner

example for tourism, this could also be an attractive element for clients,in this case for tourists.

•

The selection of a particular instrument will always depend on the inter-ests of the promoters of a local economic development initiative and, of course, on the resources available for implementing any such plan. It isadvisable to start with Benchmarking in a simple and modest fashionthat can be sustained for several years, since the effectiveness of Benchmarking depends on the continuity of the process.

Bibliography

Ballin, Dieter: Von der Balanced Scorecard zur computerunterstützten Entscheidungs-

optimierung, SEM Radar 02/2003. http://www.vernetzt-denken.de, 2003Bandow, Gerhard: Balanced Scorecard und Benchmarking in der Instandhaltung, Fraunho-

fer Institut für Materialfluss und Logistik, 10/2004, http://www.competence-si-te.de/instandhaltung.nsf/3B259F145C053BE0C1256F310037B1D5/$File/bandow_scorecard.pdf

Below, Christine von: Die Wertschöpfung der IT transparent machen – Siemens BuildingTechnology Landis & Staefa Division, en: Bernhard, M.G./ Hoffschröer, S. (Ed.),Balanced Scorecard, 2003, www.symposion.de/bsc/bsc_12.htm

Bertelsmann Foundation/ Heinz Nixdorf Foundation: International Benchmarking Study“IT in School Regions“, 2003

Bertelsmann Stiftung, Hans-Böckler-Stiftung, Verband für kommunales Management KGSt(Hrsg.): Benchmarking in der lokalen Beschäftigungsförderung. Recherche und As-sessment bestehender Benchmarking-Ansätze, Gütersloh 2001

Boschma, Ron A.: Competitivness of Regions form an Evolutionary Perspective, RegionalStudies, Vol. 38.9, pp. 1001 – 1014, December 2004

Camagni, R.: On the concept of territorial competitiveness – sound or misleading?, UrbanStudies 39, 2395-2411, 2002

Camp, Robert: Benchmarking: La búsqueda de las mejores Prácticas de la industria queconducen a un desempeño excelente". Panorama Editorial, México, 1997

Collins, Robert/ Cordón, Carlos/ Julien, Denyse: Lessons form the ‘Made in Switzerland’

Study: What Makes a World-class Manufacturer? European Management Journal,Vol 14, No 6, December 1996

Erickcek, George A./ Watts, Brad R.: Rural Michigan Benchmarking, Report,http://www.upjohninst.org/regional/ruralbenchmark/start.php

European Union: Third Annual Report on the implementation of innovative measures underArticle 6 of the European Social Fund Regulation, Presented to the ESF Committeeon 5 December 2003,http://www.socialdialogue.net/docs/projects/Article6_report_2003_en.pdf

Gesellschaft für Technische Zusammenarbeit (GTZ), Systemische und beschäftigungsori-entierte Ansätze der Wirtschaftsreform und Aufbau der Marktwirtschaft,http://www.wiram.de/toolkit/hexagon/hexa_mue_benchmarking.htm




mesopartner

Huggins, Robert: Creating a UK Competitiveness Index: Regional and Local Benchmark-ing, Regional Studies, Vol. 37.1, pp. 89–96, 2003

Informationszentrum Benchmarking (IZB): Grundlagen des Benchmarking, Berlín 2002

Kaplan, Robert S. / Norton, David P.: Focusing Your Organisation on Strategy – with theBalanced Scorecard, Harvard Business Review, Collection of articles, 2nd Edition,2004

Kaplan, Robert S./ Norton, David P.: Putting the Balanced Scorecard to Work, HarvardBusiness Review, September-October 1993

Kaplan, Robert S.: City of Charlotte, Harvard Business School, Rev. Feb. 5/1999, 1999

Kitson, Michael/ Martin, Ron/ Tyler, Peter: Regional Competitivness: An Elusive yet KeyConcept?, Regional Studies, Vol. 38.9, pp. 991-999, December 2004

Kotler, P./ Haider, D.R./ Rein, I.: Marketing Places: Attracting Investment, Industry, andTourism to Cities, States, and Nations, New York 1993.

Krugman, P. Competitiveness: a dangerous obsession, Foreign Affairs 73, pp. 24-44, 1994Lennihan, Michelle: Cluster mapping – a valuable tool for policymaking?, June 2003

http://www.ebst.dk/download/pdf/cluster_lennihan.pdf

Malecki, Edward J.: Jockeying for Position: What It Means and Why It Matters to RegionalDevelopment Policy When Places Compete, Regional Studies, Vol. 38.9, pp. 1101-1120, December 2004

Meyer-Stamer, Jörg: Manual de Cómo Realizar PACA, Versión 4, Enero 2003

Molina, Maria José: PACA Ecaluation Ecuador, Final Report, De Haya, Noviembre 2004

Murgueytio, José: Guía para evaluar proyectos PACA, documento elaborado en el marcodel programa GTZ-PROMODE, Quito/ Ecuador, 2005

Organisation for Economic Co-operation and Development (OECD): Territorial Indicatorsand Benchmarking for Territorial Competitiveness Policies. The cases of Australiaand Italy, Paris 2003

Organisation for Economic Co-operation and Development (OECD): Best Practices in Lo-cal Development, 1999, http://europa.eu.int/comm/regional_policy/innovation/ in-novating/pacts/pdf/leed_en.pdf

Porter, Michael.E. The Competitive Advantage of Nations, New York, 1990.

Porter, Michael E.: Clusters and the New Economics of Competition. Harvard BusinessReview, 76.1998, 6.

Porter, Michael E.: The Economic Performance of Regions: Regional Studies, Vol. 37.6&7,pp. 549–578, August/October 2003

Rosenfeld, Stuart A.: Creating Smart Systems. A guide to cluster strategies in less favouredregions. European Union-Regional Innovation Strategies, North Carolina, 2002




mesopartner

Micro-Level

Points: 1 2 3 4

ISO 9000 There are no or only a handful of certifiedcompanies in the locality

In the main industries, only a minority of companies is certified

Benchmarking Hardly any company is involved in anysystematic internal benchmarking effort

In the main industries, only a minority of companies is pursuing a systematic internalbenchmarking effort

Specialization In the main industries, most companies areproducing the same or very similar products

In the main industries, there is some degreeof specialization between companies, bothin terms of final products and in terms of production steps along the value chain

Informal col-laboration

In the main industries, there is little or notinformal collaboration between companies

In the main industries, there is some degreeof informal collaboration between compa-nies, e.g. mutual support after a key ma-chine broke down

Formal col-laboration

In the main industries, there is little or notformal collaboration between companies

In the main industries, there is some degreeof formal collaboration between companies,e.g. joint visits to foreign fairs

Market failure Barriers to entry for new businesses arevery high, and many subsectors of the ter-ritorial economy are monopolized

There are barriers to entry for new busi-nesses in some subsectors of the territorialeconomy




mesopartner

Meso-Level

Points: 1 2 3 4

Policy There are few defined economic and busi-ness promotion activities

Government and other institutions have de-fined economic and business promotionpolicies, but they are fragmented and ideo-syncratic

Evaluation Governmental economic development andbusiness promotion organisations are notevaluated

Governmental economic development andbusiness promotion organisations are onlyoccasionally evaluated

SME promo-

tion

Institutions do not respond to the needs of

companies

Only some institutions respond to some

extent to the needs of companies

Chamber The Business Chamber is little more than aclub of some local business leaders

The Business Chamber has a few profes-sionals and is organizing activities such aslegal advice and seminars

Business Asso-ciations

There are no operational sectoral businessassociations

The capacity of sectoral business associa-tions is limited, e.g. to ad-hoc lobbying ac-tivities




mesopartner

Meso-Level (continued)

Points: 1 2 3 4

Secondarytraining

Local institutions do not respond to theneeds of companies and the labor market

Only some institutions respond to someextent to the needs of companies and thelabor market

Higher educa-tion (if locallyexistent)

Local institutions do not respond to theneeds of companies and the labor market


Technologyinstitutions (if

locally exis-tent)

Institutions do not respond to the needs of companies

Only some institutions respond to someextent to the needs of companies

Developmentfinance institu-tions, includingmicro-finance

Institutions do not respond to the needs of companies and the labor market


Co-ordination There is little communication and no co-ordination among meso-level institutions

There is some amount of communicationand co-ordination among some of the meso-

level institutions




mesopartner

Macro-Level

Points: 1 2 3 4

Finance Local government is financially broke andhas no means of fulfilling tasks which areelementary for economic development (in-frastructure, education, health)

Local government is suffering from budgetrestrictions, but it fulfills its elementarytasks

Red tape There is a dense web of laws, regulationsand permits which make doing businessreally difficult, and local government isdoing little to simplify things

There are numerous laws, regulations andpermits but local government is trying toreduce them, and it tries to make processesmore transparent and efficient

Business mind-edness Local government officials have no ideawhat running a business involves, and theydo not care

Local government understand that runninga business is not easy, but still they interactwith companies in a bureaucratic manner

Corruption Most interaction with government involvesa bribe

Businesses do not have to bribe governmentofficials, but it makes processes muchswifter




mesopartner

Meta-Level

Points: 1 2 3 4

Government Local government agencies are not inter-ested in economic development

Local government agencies show some in-terest in economic development, but it isnot their top priority

Entrepreneur-ship

Businesspeople enjoy little respect and so-cial prestige

Businesspeople are respected, but other pro-fessions are more prestigious

Organisations There are no or weak business organisa-tions. They have a small membership base.

Business organisations are mostly domi-nated by local leading businesspeople

which pursue their own agenda

Policy net-works

There are no effective means and channelsof communication and negotiation betweenlocal government and the private sector

There are some means and channels of communication and negotiation betweenlocal government and the private sector, butthey are on an ad-hoc basis

Vision, devel-

opment strat-egy

There is no shared vision regarding the de-

velopment goal and strategy of the locality

There are competing views regarding the

development goal and strategy of the local-ity



mesopartner is a consultancy partnership that specialises interritorial development, cluster promotion and value chain devel-

opment. It was founded in December 2002 and registered inApril 2003 by Dr Ulrich Harmes-Liedtke, Dr Jörg Meyer-Stamerand Christian Schoen. Frank Wältring joined in 2004.

The most widely used product of mesopartner is PACA, a meth-odology to kick-start or refocus local economic development ini-tiatives which has been developed by Jörg Meyer-Stamer. It hasbeen successfully applied in many developing and transformationcountries. The main objectives of mesopartner are

• to train PACA practitioners in various countries,

• to develop more specific PACA instruments, for instance forcluster analysis, value chain analysis and analysis of govern-ment-created obstacles to business,

• to develop and disseminate further methodologies and toolsfor local and regional economic development initiatives,

• to develop innovative concepts and tools to train practitionersin local and regional economic development.

Another mesopartner product is RALIS (Rapid Appraisal of LocalInnovation Systems). As technology and innovation continue to bemajor preoccupations of local actors who want to create a local-ised advantage in a globalised world, we expect that there is a lotof potential demand for a tool like RALIS which addresses themost important obstacle for the leveraging of local innovationsystems: fragmentation between local companies, agencies andorganisations.

Further mesopartner products are• the Compass of Local Competitiveness, a balanced scorecard-

based approach to performance management of territorial de-velopment initiatives,

• GENESIS, a methodology for the rapid and participatoryelaboration of strategic interventions for a local or regionaleconomy.

You find more information at our website, www.mesopartner.com

benchmarking territorial competitiveness

Documents